A lawsuit loan is a financial tool that aims to help plaintiffs with quick cash when they are in the middle of a lawsuit. When hearing the term loan, everyone wants to know what they have to pay afterward and how costly it will be for them. All of your questions will be answered here regarding the amount plaintiffs need to pay for a lawsuit loan.
Not every plaintiff is able to finance their lawsuit if they don’t have enough savings. Even people who get injured and left with no job are unable to cover the litigation expenses. Further, the financial trouble can increase if the plaintiff gets disabled because of the injury and is left with no source of income. They become dependent on future compensation, which is only possible if you continue with court proceedings and wait years to receive a settlement.
We understand that plaintiffs need money to keep fighting for their justice, so we provide pre-settlement loans to people who are willing to surrender a portion of their future award. Lawsuit loans are not debt but cash exchanges where you are getting money now, and you need to pay once you win the settlement. But it does come with a certain cost “interest rate”. Read ahead to learn more about lawsuit loan costs.
Lawsuit Loans Cost Overview
As the term suggests, a lawsuit loan is a kind of loan you get against your ongoing lawsuit. But the term loan should not be misinterpreted as a traditional loan, in fact it is a simple cash advance. You get the money against your lawsuit based on its strength. To get the money now, you will agree to share a portion of your future settlement award with the lender if you win the case. Unlike traditional loans, the best part of lawsuit funding is that it is risk-free.
You must only repay the amount and interest rate if you win the case. And if you lose the settlement and the judgment is not in your favor, you don’t have to repay anything. Since the risk of taking a pre-settlement loan on the plaintiff is null, and the complete risk bearer for a lawsuit loan is on the lender. So they are going to charge you for that.
Generally, a lawsuit loan company charges between 4% and 8% as interest rates against the cash they offer. Since the risk is high on the lending side, the higher interest rate is justifiable. A lawsuit that has a higher chance of winning a settlement is going to get a cheap interest rate, whereas the risk is great, and the lawsuit is not very strong and probable to win a settlement, the interest rate is going to be a bit high.
What Are You Going To Pay For A Lawsuit Loan?
As a plaintiff, if you want to get a lawsuit loan, there is no need to worry about the upfront costs. Our lawsuit loan company wants to provide you with a cash advance to lessen your financial burdens rather than adding to them. The interest and the principal loan amount will only be collected once you win the settlement, so you can relax, as you don’t have to pay for the lawsuit loan while you are in ongoing litigation.
Getting a pre-settlement loan is very easy. If you have a pending court case in which you are the victim of an injury and need cash to cover the litigation expenses, you are an eligible candidate. You can get up to 20% of your expected settlement value as a pre-settlement loan. You will pay a 4 to 8% interest rate over your lawsuit loan. Let’s understand by example to make things clearer for you:
If you have a pending lawsuit that is expected to settle for $100,000 in the near future, and your attorney assures the pre-settlement financing company of its strength and expected value, then you can get up to $20,000 as a lawsuit loan amount. The amount generally will be up to 20% of your expected settlement value. Now that you have your lawsuit loan, you also have to pay for it. Let’s understand how much a lawsuit loan will cost you over your $20,000 loan amount.
Let’s assume you are getting a lawsuit loan on a monthly interest rate of 4%. If the case settles in exactly 12 months after you take the cash advance, so you have to pay $20,000 x .04 x 12 = $9,600 as the interest rate. So you will end up paying $20,000 + $9,600 = $29,600 to the legal funding company for the cash advance of $20,000.
Now that you understand the amount you may end up paying a legal funding company, you have to evaluate your current situation to determine if you need a lawsuit loan. We know the interest rate is a bit high for legal funding, but it counters the risks. A plaintiff is not obligated to pay anything if they lose the case, making it a more attractive option if you need money right now and don’t have any other means to raise money for your ongoing case.
How Many Days to Wait to Get the Money That the Plaintiff Needs?
Unlike other traditional loans and arrangements, there is no need to wait weeks to get lawsuit funding. Most of the time, the plaintiff only has to wait 24 to 48 hours before getting the money from the lawsuit loan company. This is definitely the fastest way of acquiring cash if you need it urgently.
The only thing required to get a lawsuit loan is that you have a strong lawsuit where you are the victim of an injury caused by someone else. You have a pending case related to personal injury, car accident, product liability, etc. You can check the complete list of cases against which you can take a pre-settlement loan. Further, lawsuit loans are legal in most US states, but few states have restrictions on dealing with lawsuit funding. So check the list of states where you can get a pre-settlement loan.
Always remember that a plaintiff must consult his lawyer before submitting the application form to the pre-settlement funding company. Without the lawyer’s approval, there is a good chance the lawsuit loan company will turn down the application. Therefore, never forget to seek legal advice and to tell the lawyers about your plans for lawsuit funding. If you still don’t have an attorney, you must check out how to get pre-settlement funding without attorney consent.